US is willing to lend money for the Reko Diq mining project

The United States has expressed interest in providing loan financing for the multibillion-dollar Reko Diq gold and mining project. This might be Washington’s first significant investment in Pakistan in many years.

According to government and diplomatic sources, the US government’s sovereign export credit agency, the Export-Import (Exim) Bank of the United States, was eager to provide financial support for the Reko Diq project.

Although the latest feasibility study for the Reko Diq project has not yet been finalized, it is expected to cost between $6 billion and $6.5 billion.

According to sources, the project must invest $3 billion to $3.5 billion in loan finance. It is unknown how much of this will come from other creditors, such as the International Finance Corporation (IFC), and how much from the US Exim Bank.

According to insiders, the idea of prolonging the loan is being evaluated for the purchase of US-made earthmoving equipment. They further stated that the loan was only available if Exim Bank was given preferred creditor status.

“A number of financial institutions are exploring the possibility of financing the Reko Diq project,” stated Qamar Abbasi, the finance ministry’s spokesperson.

He stated that although the project authorities are communicating with these financial institutions and conversations are still underway, specific information regarding particular institutions is not yet available.

The sources state that US Ambassador to Islamabad Donald Blome and Finance Minister Muhammad Aurangzeb have discussed the issue.

The US embassy did not confirm or deny the development when approached.

In response to a query on whether the US ambassador spoke with Pakistani officials about the possibility of providing a loan for the Reko Diq project, an embassy spokesperson stated that the US “would not comment on the content of diplomatic conversations.”

In response to another inquiry on the US’s interest in providing the loan, the spokesman said that the US was firmly dedicated to collaborating with Pakistan to advance trade, investment, and the country’s overall economic ties.

According to the spokesman, the United States is Pakistan’s top export market, a significant source of top-notch investment, and a reliable ally for shared economic success. The United States also continues to back Pakistan’s economic reforms.

If all parties, including main shareholder Barrick Gold, who also holds managerial control, reach a deal, it will mark the first significant US investment in Pakistan in many years.

The relationship between Pakistan and China had kept the US-Pakistan economic ties frigid for longer.

The China-Pakistan Economic Corridor (CPEC) has open opposition from the US Congress and the administration.

Barrick Gold owns 50% of the Reko Diq project, three federal government agencies own 25%, and Balochistan owns the remaining 25%. Pakistan had already extended an offer to the Kingdom of Saudi Arabia to purchase interests owned by federal government bodies.

Barrick Gold is currently revising the feasibility studies for the project. A briefing presented to the Special Investment Facilitation Council stated that the first production is anticipated to occur by 2028, and the feasibility study will be finished by December 2024.

Prime Minister Shehbaz Sharif had expressed his wish for the Barrick Gold Company to utilize the Gwadar port for project-related activities during a recent meeting. However, because there isn’t much road infrastructure near Gwadar, the firm is eager to use the port in Karachi.

According to a briefing provided to the Saudi investors, the Reko Diq project is anticipated to last at least 40 years. With a total process capacity of 80 million tonnes annually, the facility is anticipated to be completed in two phases.

Any US funding for the project would help secure financing from other creditors. However, to do that, Pakistan will need to give the Exim Bank preferred creditor status—a position that is only granted to multilateral lenders.

According to the sources, Pakistan was debating internally whether to give a foreign sovereign bank preferred creditor status.

According to the reports, Pakistan is looking into leasing nearby Tethyan Metallogenic Belt blocks in addition to the current block.